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CME update: abundant livestock supplies push cattle futures lower

08 July 2020

US cattle futures ended mostly lower on 7 July following pressure from abundant supplies.

Reuters reports that US live cattle futures ended lower on Tuesday after approaching a two-month high. Feeder cattle pulled back after reaching their highest price in a month on Monday 6 July.

"We've gotten a bit overbought on the cattle," said Matt Wiegand, commodity broker for FuturesOne.

Chicago Mercantile Exchange August live cattle settled 0.100 cents lower at 100.000 cents per pound. August feeder cattle fell 1.225 cents to 134.925 cents per pound.

The United States has plenty of cattle after farmers and ranchers expanded herds. There were 11.7 million head in feedlots on 1 June, the second highest inventory for that date since records began in 1996, according to the US Department of Agriculture.

Processors like Tyson Foods Inc and Brazilian-owned JBS USA are working through supplies that backed up in feedlots when meat plants temporarily closed in April due to the coronavirus pandemic.

Slaughterhouses have since reopened, although many are working at reduced capacities because workers are absent and operators implemented social distancing measures.

There were more than 17,000 COVID-19 cases and nearly 100 deaths among US meatpacking workers in April and May, according to a Centers for Disease Control and Prevention report released on Tuesday.

Meat companies slaughtered an estimated 119,000 cattle on Tuesday, compared to up to 124,000 in March before the shutdowns, according to the USDA.

Margins rose to $308.45 per head of cattle from $305.70 a week ago for beef processors, according to livestock marketing advisory service HedgersEdge.com.

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